Wednesday, September 10, 2014

The Only Ladder Worth Climbing

Our parents may have told us to study hard, work hard and climb the corporate ladder.

They're right. If you happen to live in the 50s...

The corporate ladder no longer spits out pension plans and retirement benefits. In this white-collar era, there's no longer a golden parachute waiting for you at the very top.

I mean, of course you can try climbing that ladder for the next 40 years and see if there's a huge bounty waiting at the end of it (do let me know how it goes).

Meanwhile, there's another ladder that you can climb. An alternative, and it looks like this:

The Loan Drone

You are a loan drone if the paycheck that you draw is mostly thrown towards the evil debt monster. At times, it feels like you're throwing a glass of water at a burning building - little is done to extinguish it, while the paycheck that is thrown towards the evil debt monster seems to enrage it further.

While this is essentially the least favourable position to be in, a fair number of us start out at this stage. It may have been caused by a hefty student loan, a medical condition or other personal circumstances.

The good news, however, is that you're at the bottom of the ladder.

And the only direction you have left is upwards.

Paycheck Slave

Congratulations, you may have defeated the evil debt monster.

Enter paycheck slavery. This is where you turn up at the cubicle from 9-5, working 70-80 hours a week (or more). Life seems comfortable at the beginning, and then you start to want more. A car, a house, gadgets and other material possessions that creates that sudden spike in happiness.

Happiness that doesn't last long.

You realise that you barely save each month and you struggle to make ends meet. You're tied to your paycheck, have limited options and that's why you put up with the eccentric bosses, the rigid corporate structure and the fact that you have to check your emails on Sundays.

Important Rat
After many years of running on the corporate treadmill, you have risen to the ranks of an important rat - somewhere in upper/middle management. The pay seems great, the benefits - even better.

But with this newly inflated lifestyle, you yearn for a bigger car, a bigger house and luxuries that match your perceived status. At the same time, your responsibilities seem to grow at a rate that is proportional to your material desires.

You realise that this is taking a toll on your personal life, your loved ones and your family - like a cancer that slowly sucks the youth out of you.

It is at this time that you see how silly the whole rat race is. So, you start saving more.

As you tend to earn more as an Important Rat, this stage makes or breaks you. You either succumb to lifestyle inflation or you move on to the next stage.

System Owner
Notice how I'm not using the term 'Business Owner' (as some businesses are just jobs in disguise). A 'system' is where there is little active involvement, but yet it generates a steady flow of active income.

While this is not an easy feat, it is one of the most effective ways to achieve financial freedom. A system owner knows that time can be multiplied.

A dentist that earns a six figure income is merely a high income earner. However, if that dentist establishes a chain of dental clinics and replicates his/her best practices, then he/she is now a system owner.

He or she can choose to take a vacation for half a year and need not worry about his/her practice.

That's the real value of the system. More freedom ahead.

Bucket Master
The bucket master has the ultimate form of financial freedom. (Read: Bucket System)

Once you have built the right buckets, it will continuously provide a stream of relatively passive income.

The Best Part of This Ladder

Unlike the corporate ladder where there is a relatively fixed career path, there is nothing stopping a 'Loan Drone' from progressing into a 'System Owner' or a 'Bucket Master'. Additionally, there's nothing stopping you from assuming 2-3 different roles at the same time.

You could be an 'Important Rat', a 'System Owner' and a 'Bucket Master' all at the same time..

Once you've figured this out, you can almost instantly start to make the change that you want to see in your life.